To truly innovate, you must embrace failure. Here’s how to do it

Embracing and learning from failure is a pivotal part of innovation. Here’s how to encourage failure at your organization

Let’s talk about the thing that terrifies almost everyone: failure. The truth is we all fail. 

Yet, the problem isn’t that failure happens. It’s that when we don’t learn from failure, it holds us back as individuals and as organizations.

Behind every innovation that earns accolades or lands on front pages is failure — a lot of it. Steve Jobs was fired from Apple, the company he founded and would return to great acclaim later.  Spanx’s Sara Blakely was rejected by multiple manufacturers who didn’t see her vision of a footless pantyhose. Yet, she just sold a majority stake to Blackstone in a deal that values the company at over $1.2 billion. Howard Schultz, Starbucks’ legendary CEO, quit the company in the 1980s because its original owners didn’t want to offer traditional espresso drinks.

The strongest innovators and organizations embrace failure and embody the no-risk, no-reward mantra. They know that failure, if learned from and improved upon, can lead to big success. 

How are you feeling right now after reading the word “failure” eight times? Did it make you uncomfortable to even acknowledge that word as a potential gateway to the word we all want, which is “success?” If so, you’re not alone. Stick with me, and let’s see if we can get a bit more comfortable.

Failure’s internal stigma

Most large organizations, especially those with a long legacy, don’t do failure. And honestly, I get it; there are shareholders and layers of hierarchy to deal with. I’ve been in those rooms, living in the intensity of decision-making and having to make choices that make a deep impact. 

However, it’s hard for me to stand by and watch truly capable companies that have the resources to try new things and not take risks. Instead, they stick with what they know and wait to be second or third to market with the hopes of watching where their competitors fail. 

For example, a company operating within its core might redo its website, believing that will bring it closer to Digital Transformation (it won’t). A company taking a risk might look to emerging technologies, experiment, and put something into market to test its potential.  

From what I’ve seen, the further out a company gets from its core capabilities, the more that risk isn’t rewarded. Why? Because the risk doesn’t have an ROI immediately attached to the core value of the business, and failure has no measurement. If the launch of the emerging market technology fails to produce immediate ROI or prove immediate value, most companies abandon the project. And again, I get it they have people to answer to.

But what if an organization took the time to analyze the launch of an emerging technology? Their insights could help advance other company initiatives. Also, the company’s executives might recognize the future potential in the project and put a pin in it, committing dollars to resume it when they see specific market indicators change for the better. 

Unfortunately, because of the pandemic, we’re not seeing as many big risks like this. The pace and depth of innovation have, in some instances, gone backward. Many organizations have returned to being extremely risk-averse,  pulling back and focusing on their core. That’s understandable, but it’s not the way forward, and why I suggest creating a culture that talks openly about failure.

Let’s talk about how to do that.

Start by reframing failure

In innovation, we talk a lot about reframing. Put simply, reframing takes a challenge or statement and takes a 180-degree approach to think differently about it. Failure can be reframed within an organization, but you need to design for it intentionally.

Let’s think about what works when a project is a success and leadership is on board. One of the most effective ways to get buy-in and reframe challenges is through storytelling. Companies like Airbnb and Nike know this better than anyone. That’s why at the end of a project at companies like that, cliche powerpoints are frowned upon. Instead, teams are urged to create a tangible deliverable that emotionally moves people. It’s normal for teams to create a beautifully designed book or a powerful short film that recaps a project. Doing this consistently reminds everyone what they’re building together and motivates them to keep raising the bar.

So if this type of storytelling works for “successful projects,” why couldn’t it work for “failure projects” by creating powerful final deliverables that reframe the “failure” of a project. You might focus on stories of how a user struggled and ultimately failed - but used the product/service in a whole new way (ahem, reframe!).  Or, you might include a video of the team and the sweat equity they put into the project, trying so hard to test new things that ultimately didn’t work.

Creating this kind of narrative fosters an emotional connection for your project, colleagues, and leadership, convincing them not to throw the baby out with the bathwater when a project doesn’t land exactly how you expected. In your deliverable, you also should outline the positives that came from the project. What did you learn? What new ideas has it inspired? How can it be used to advance your company’s goals?

Incentivize people to fail

People steer clear of failure because they know it won’t get them ahead in their careers. But what if that wasn’t the case? What if employees, particularly executives, were rewarded for failure?

Executives are typically compensated, rewarded, and promoted based on delivery, especially those in product delivery. Their performance is evaluated by questions like: Did we increase our NPS scores? Did we deliver X, Y, Z feature or product into market? Did we increase revenue? Did we save the company money? 

 To reward executives for failure, we might evaluate the number of experiments delivered or the number of groups brought together to accomplish an innovation. By rewarding that kind of behavior at the very top, it’s sending the message throughout the company that failure is welcome at an organization. Most importantly, it communicates that it’s okay to try something new.

Measure failure

So if you create a compelling narrative around failure, incentivize people to fail - that leads to another question: How can you create metrics to prove the value of failure? What if you considered highlighting the value of failure and taking risks instead of measuring NPS or speed to market? Here are some to consider:

• How many experiments did we do per year? The goal is to increase these amounts and make experiments part of the goal of innovation, regardless of ROI. It's NOT about ROI at this stage — it's about learning if this new idea will have value and potentially get to ROI for the company.

• What did we learn? If the experiment worked or didn't, what did we learn about the value of the feature? Or the new technology in the market?  Or where/how, if conditions aren't perfect now, would we want to re-evaluate these concepts/experiments for future use? Don’t shelve things and forget about them, or even worse, re-do the project again without the context of what's already been done.

• What can be applied to other projects? Seek out areas of the business that might value this information, democratize the learnings, see if other teams are experimenting with similar things, and help other teams start ahead of Square One.

• Did you have a multi-disciplined team or people from different areas of the business?  Experiments should take place in the context of different skillsets and individuals that bring knowledge and skill, not just because they belong in a group. Find the right people to bring to the table for this work.

• Did it cause discomfort or stretch our capabilities/abilities? Learning comes from people stretching their knowledge, staying fresh, and getting out of their comfort zones. Have your team rate their level of discomfort on a simple 1-5 scale throughout the project. If people were uncomfortable, that could signal growth. 

• Did it cause debate? I think some organizations are scared of debate, and since they are built on hierarchy, not much debate will happen as the execs will set the path, and others will follow. What if you flipped that, and it caused debate, discussion, and really good conversation instead of everyone saying "yes?” 

Do a failure “pilot project”

Embracing failure is a radical act for most organizations, especially legacy brands. I get that there may be a lot of resistance at first. That’s why I recommend starting with a failure “pilot project” led by natural risk-takers within your organization and NOT just an innovation group. You’ll learn a lot, and their work will signal to the rest of your company that failure is no longer stigmatized.

Here’s how you might set up the pilot project:

• Give your select group a directive to try, say, five experiments in a specific time frame.

• Ask for updates halfway through the process, but don’t hound your team for metrics. 

• Don’t micromanage. Allow those bold thinkers in your organization to take risks without getting their hands slapped because they went out of “typical” bounds.

• Regroup when the process runs its course and go over what you learned. Require teams to share their failures, their learnings as much as their successes. Then, determine what you would change next time you do this exercise.

• Reward your risk-takers. Heck, hand out a Failure Award each year — and have it mean more than any other award in the company — because publically rewarding risk begets more risk-taking.

Your goal is to ensure that bold people in your organization feel empowered to run free, experiment, and fail. The key is to simply reward them for trying new things, no matter the results.

Why failure is key to organizational success

If you don’t empower your teams or colleagues to take risks and fail, you risk losing your most talented people. They will seek out organizations that reward risk-taking or will leave to start their own companies. I don’t need to tell you what happens to a company drained of its best talent. 

But if you create a culture that welcomes experimentation and learns from failure, extraordinary things will happen. Your teams and colleagues will try bold ideas and, rather than give up at the first fail, they’ll persevere. Their determination will be infectious and will inspire other people at your organization to start sharing and even testing new ideas. As word spreads about what a “cool” and “innovative” company yours is, people will fight to work at your organization.

In time, with determination and creativity and some failure, what you create together could be your company’s greatest innovation yet.